“PACCAR’s financial results reflect the company’s premium-quality products and services, record heavy-duty truck market share in the U.S. and Canada, record aftermarket parts results and a strong European truck market. I am very proud of our 25,000 employees who have delivered outstanding products and services to our customers.”
PACCAR’s profitability and strong cash flow have enabled the company to invest in its core markets and expand its presence in emerging markets. “PACCAR is well-positioned for long-term growth with ongoing investments in new truck models, integrated PACCAR powertrains, enhanced aerodynamic truck designs, advanced driver assistance and truck connectivity technologies, and expanded manufacturing and parts distribution facilities,” added Armstrong.
Excellent Revenue and Net Income
PACCAR achieved record quarterly net sales and financial service revenues of $5.45 billion in the fourth quarter 2017 compared to $4.07 billion for the same period in 2016. PACCAR earned $589.2 million ($1.67 per diluted share) for the fourth quarter of 2017, including $173.4 million of net tax benefits resulting from recent changes to U.S. tax law. The one-time net tax benefits include a reduction of net deferred tax liabilities of $304.0 million, partially offset by a tax on accumulated foreign earnings of $130.6 million. Excluding the one-time tax benefits, PACCAR reported adjusted net income (non-GAAP)1 of $415.8 million ($1.18 per diluted share). The company earned $288.8 million ($.82 per diluted share) in the fourth quarter of 2016.
PACCAR achieved record revenues of $19.46 billion in 2017, a 14 percent increase compared to revenues of $17.03 billion in 2016. PACCAR earned $1.68 billion ($4.75 per diluted share) in 2017, including the $173.4 million one-time tax benefit. Excluding the one-time tax benefit, PACCAR earned adjusted net income (non-GAAP)1 of $1.50 billion ($4.26 per diluted share). The company reported annual net income of $521.7 million ($1.48 per diluted share) in 2016, including an $833.0 million non-recurring charge for a European Commission (EC) settlement. Excluding the charge, PACCAR reported adjusted net income (non-GAAP) of $1.35 billion ($3.85 per diluted share) in 2016.
United States Tax Reform Benefit
“The enacted tax legislation will generate positive cash flow for PACCAR as well as benefit the transportation industry in the United States,” said Harrie Schippers, president and chief financial officer. “The revised corporate tax rate, comparable to other leading OECD countries’ tax rates, and accelerated machinery and equipment depreciation, will likely stimulate increased capital investment in the United States.” PACCAR estimates that its 2018 effective global tax rate will be 23 to 25 percent, compared to approximately 31 percent prior to the new tax law.
PACCAR declared cash dividends of $2.19 per share during 2017, including a special dividend of $1.20 per share paid in January 2018. This compares to cash dividends of $1.56 per share declared in 2016. PACCAR’s dividend yield was an excellent 3.1 percent as of December 31, 2017. The company has paid a dividend every year since 1941.
Business Highlights – 2017
· PACCAR delivered 158,900 vehicles worldwide, including a record 29,700 medium-duty trucks.
· PACCAR invested $697.8 million in capital projects and research and development.
· DAF CF and XF trucks earned the prestigious “International Truck of the Year 2018” award.
· Kenworth and Peterbilt achieved record Class 8 retail market share of 30.7 percent in the U.S. and Canada (28.5 percent in 2016).
· Kenworth and Peterbilt launched the PACCAR front and rear axles and the PACCAR automated transmission in North America.
· DAF Brasil earned the “Truck Brand of the Year” for the second consecutive year by the Brasilian national dealer association, Fenabrave.
· The PACCAR Engine Factory in Columbus, Mississippi earned the “2017 Quality Plant of the Year” award from Quality Magazine.
· PACCAR Parts opened new Parts Distribution Centers in Brisbane, Australia and Panama City, Panama.
· The PACCAR Innovation Center opened in Silicon Valley, California.
· PACCAR was honored by InformationWeek magazine for excellence in data analytics.
Financial Highlights – Fourth Quarter 2017
Highlights of PACCAR’s financial results during the fourth quarter of 2017 include:
· Record quarterly consolidated net sales and revenues of $5.45 billion.
· Record quarterly worldwide deliveries of 44,300 trucks.
· Net income of $589.2 million, including $173.4 million of one-time tax benefits.
· Cash provided by operations of $893.3 million.
· Record PACCAR Parts revenue of $877.2 million.
· Record PACCAR Parts pretax income of $157.2 million.
· Research and development expenses of $70.6 million.
· Capital investments of $158.0 million.
Financial Highlights – Full Year 2017
Highlights of PACCAR’s financial results during 2017 include:
· Record consolidated net sales and revenues of $19.46 billion.
· Net income of $1.68 billion, including $173.4 million of one-time tax benefits.
· Record PACCAR Parts revenue of $3.33 billion.
· Record PACCAR Parts pretax income of $614.2 million.
· Financial Services pretax income of $264.0 million on assets of $13.20 billion.
· Cash provided by operations of $2.72 billion.
· Dividends declared of $771.1 million.
· Medium-term note (MTN) issuances of $1.63 billion.
· Record stockholders’ equity of $8.05 billion.
Global Truck Markets
Class 8 truck industry retail sales in the U.S. and Canada were 218,000 units in 2017, compared to 216,000 vehicles sold in 2016. “Truck demand is increasing due to good economic growth, increased consumer spending, and strong commercial and residential construction, which has resulted in record freight tonnage and high fleet capacity utilization. U.S. and Canada Class 8 truck industry retail sales are expected to increase to a range of 235,000-265,000 trucks in 2018,” said Gary Moore, PACCAR executive vice president. “Kenworth and Peterbilt achieved record Class 8 retail market share of 30.7 percent in the U.S. and Canada in 2017, compared to 28.5 percent in 2016. Customers benefited from Kenworth and Peterbilt vehicles’ outstanding fuel efficiency and reliability.”
“The European economies have grown steadily for four consecutive years, leading to strong transport activity and truck demand,” said Preston Feight, DAF president. “DAF trucks deliver premium quality, low operating costs and superior driver comfort for our customers.” European truck industry sales above 16-tonnes were a robust 306,000 trucks in 2017. It is estimated that European truck industry sales in the above 16-tonne market in 2018 will be another excellent year in the range of 290,000-320,000 trucks.
PACCAR achieved excellent 2017 truck production and market share in Australia, Mexico, Taiwan and Brasil, delivering 17,600 trucks in these markets and surrounding regions. “DAF Brasil was honored in 2017 by Fenabrave, Brasil’s industry dealer association, as the most desired truck brand in Brasil for the second consecutive year,” said Marco Davila, PACCAR vice president.
DAF XF and CF Trucks Earn “International Truck of the Year 2018” Award
The new DAF XF and CF trucks earned the “International Truck of the Year 2018” award, as judged by an independent jury of leading transportation journalists from 23 European countries.
The award is presented to a new truck or model range that has made the largest contribution to road transportation efficiency based on several criteria, including technological innovation, driver comfort, safety, fuel efficiency, environmental leadership and low total cost of ownership. The new DAF XF and CF trucks deliver seven percent greater fuel efficiency and feature enhanced PACCAR MX-13 and MX-11 engines. Customers’ vehicles can carry up to 220 lbs. of additional payload due to lighter-weight powertrain components and exhaust systems.
“Earning the Truck of the Year award reflects DAF’s industry-leading quality and transportation solutions that enhance customers’ operational efficiency,” commented Ron Borsboom, DAF chief engineer. “It is a wonderful recognition for DAF’s employees, dealers and suppliers.”